Standing Committee D

[Mr. Alan Hurst in the Chair]

Commonhold and Leasehold Reform Bill [Lords]

Sally Keeble: I beg to move,
 That the Standing Committee recommends that two days be allotted for Consideration and Third Reading of the Commonhold and Leasehold Reform Bill [Lords].
 The motion has been discussed, so I do not need to explain it. 
 Question put and agreed to.

Clause 160 - No forfeiture notice before determination of breach

Question proposed, That the clause stand part of the Bill.

Brian Iddon: I wish to discuss forfeiture in detail, as it is one of the most important provisions of the Bill. Hon. Members will have seen that I tabled an amendment to clause 159, which would have deleted clause 160 and the two subsequent clauses. The amendment was not selected—I have no complaints about that—and I hope to discuss those issues when we deal with new clause 12. However, it seems preferable to deal with forfeiture in general at this stage.
 The Bill has been around a long time. It was published as a draft Bill under the modernisation procedures introduced by the Government, and there was a long period of consultation. In December 2000, the Department of the Environment, Transport and the Regions published a summary of proposals following that consultation. Paragraph 12 of that document states: 
 ''We accept the need for effective sanctions against defaulters. But we do not believe it is right that a landlord can gain a windfall profit by obtaining absolute possession at the expense of the leaseholder. Instead, we propose that where the landlord obtains possession, the leaseholder should be compensated for the loss of his interest after deducting monies owed to the landlord.'' 
Sadly, there is no sign of legislation on that point in the Bill, which disappoints hon. Members on both sides. More particularly, it will disappoint the many citizens who have been troubled by forfeiture. 
 To give them their due, the Government propose to implement the other proposals on abuse of the forfeiture procedure listed in the DETR document, which is available on the internet. In my opinion and that of many others that does not go far enough. The 
 abolition of forfeiture has long been talked about in the Labour party and I believed that we would abolish it through mechanisms contained in the Bill. 
 There is plenty of support for my view. The Council of Mortgage Lenders, whose headquarters is in Savile Row—where else?— represents 98 per cent. of the residential lending market. The council wrote on 21 January to the Leasehold Enfranchisement Association. I quote selectively from the letter. It said that: 
 ''While some reforms have already been made to limit the circumstances where landlords can pursue forfeiture action, further amendments are still necessary. These should ensure that the mode of recourse available to landlords is evenly balanced against the alleged breach, and so avoid the automatic use of outmoded and draconian proceedings.'' 
The Committee should note the word ''outmoded'' and the phrase ''draconian proceedings''. Many people believe that that describes forfeiture well. As I shall try to illustrate, it is a one-way street, with everything going in the landlord's favour. 
 Ben Young, the chief executive of the Retirement Lease Housing Association, wrote to me on 15 January. He was the first developer in the country to start building retirement housing more than 30 years ago and he supports the abolition of forfeiture. He reckons that few landlords will, but he is one of the few. He says that 
''there are good reasons why Forfeiture should now be abolished'' 
and he gives three: 
 ''1. Good landlords do not need it. In my eleven years leading RLHA, we have not once needed to resort to Forfeiture. Certainly disputes arise from time to time, but these are pursued through the normal debt recovery procedures. 
 2. The threat of losing one's home is a draconian''— 
note the use of the word ''draconian'' again— 
''measure which is usually out of all proportion to the scale of the debt even where proven, and can cause great human distress and misery to leaseholders when threatened without justification, as is often the case. 
 3. The remedy of Forfeiture appears archaic in the modern legal context which seeks to create a fairer balance of the rights of individuals at Law, and it helps to perpetuate the discredited reputation of leasehold tenure.'' 
In a letter of 16 January, the Leasehold Enfranchisement Association states that the key points about forfeiture are: 
''(i) It is a punishment that far outweighs the crime and, as such, runs contrary to natural justice. 
 (ii) It is a sanction which involves loss of home and, as such, trades on emotional vulnerability. It is unacceptably invasive. 
 (iii) It is argued by the protagonists of forfeiture that the courts do not like to award it and it can therefore be regarded merely as a useful deterrent. However, sufficient numbers of cases do occur for a '146 notice' to be a source of psychological terror and extreme domestic anxiety.'' 
Those strong words come not from Members of Parliament, but from people who deal in the property market. 
 On 17 January, the housing aid and legal centre of the Brighton Housing Trust wrote to the Brighton and Hove District Leaseholders Association, which passed the letter to me. The letter states:
 ''On occasions, leases are so drafted that service charges are described as being 'by way of further rent'. This gives freeholders a right to issue Legal Proceedings for Forfeiture without the necessity of having the service charge dispute resolved, either in the County Court or before the Leasehold Evaluation Tribunal . . . Often a mortgagee will pay sums demanded on account of the threat of forfeiture, as forfeiture would result in the total loss of their security i.e. all monies lent.'' 
That means that building societies force people to take action because they do not want to lose their money. The letter continues: 
''the use of forfeiture is wholly disproportionate to the value of the dispute.'' 
Harry Spillman, the chairman of the Brighton, Pavilion constituency Labour party, also forwarded me a letter. He refused to pay his maintenance charges when his kitchen ceiling started to collapse. His landlords threatened forfeiture, but Harry hired a solicitor, who convinced them that they were in breach of covenants. Three years later—note the delay—Harry's ceiling was repaired. That is not natural justice, which is why I say that forfeiture is a one-way street, with everything going in the landlord's favour. 
 I have had other letters from property developers and leasehold associations, all of which support the views expressed in those quotes. I will mention a few that might suggest how drastic forfeiture is and what misery it causes so many people. 
 Barry Gardiner mentioned a good example in which the London borough of Camden took a case to court because the leaseholder owed £1,266.38 for service charges and ground rent. The property was secured through forfeiture and was worth £350,000. In cities, especially London, property values are on that scale. That property was forfeited without any attempt, as Barry Gardiner reminded us—

Alan Hurst: Order. The hon. Gentleman is referring to the hon. Member for Brent, North (Mr. Gardiner).

Brian Iddon: I apologise, Mr. Hurst. The hon. Member for Brent, North told us that the London borough of Camden carried out no investigation. Instead, the Camden New Journal investigated the matter. Although there is no direct evidence, it has been suggested that the owner has been undergoing psychiatric treatment for two years. The flat has been taken from a vulnerable person and he has lost £350,000. In Britain in 2002, is that justice?
 All members of the Committee will know about the next case, which has had some publicity in The Times. It is about a young woman called Fiona MacMillan, who has given me permission to use it as an example. She owned a flat in London that was subject to successful forfeiture procedures, so she too lost a flat, presumably an expensive one. Even worse, she has now been lumbered with a bill for £90,000 in legal costs, and has had a breakdown. 
 Fiona MacMillan wrote to me on 22 January and said that, since she heard that the Bill was under discussion, she felt sick and had been physically sick in the street. She is convinced that she has cancer and her 
 general practitioner has told her that her problems have been caused by the stress of the forfeiture that she went through being reignited by our Committee. She is probably one of thousands subject to forfeiture procedure whose lives have been ruined. She was a graduate and had a good job in London, and has now forfeited her job as well as her flat. 
 I can give several examples of threats of forfeiture proceedings by a company called DMH.

Alan Hurst: Order. The clause is relatively narrow, albeit on forfeiture. The hon. Gentleman is obliged to keep his remarks on the clause and not make a Second Reading speech.

Brian Iddon: Thank you for your guidance, Mr. Hurst. I was trying to limit my remarks to forfeiture, but it is important to show how forfeiture arises from people owing small sums to landlords, who then threaten forfeiture and literally make people ill. I have a bill from DMH that threatens a 73-year-old man with forfeiture, but I take your guidance, Mr. Hurst, and will not dwell on such examples. However, we know of a substantial number of threats of forfeiture. In one case, the owner of a flat worth £70,000 was threatened with forfeiture for owing less than £200. Landlords could recover money in ways other than forfeiture, such as normal court procedures and putting a charge on the property.
 As a final example, I shall mention a lady who wrote to me. In a month, her expenditure is £442 and her outgoings are £343—she has set the figures out for me—which leaves her about £100 to live on. Her block of flats has a reserve fund but, for some reason of which I am not aware, it is depleted and there is no money for basic maintenance. The landlord is using the clever ploy of trying to make the residents pay £6,000 in total to replace eight bay windows. Such people do not have the money to pay. The residents argue that the work should be done when the reserve fund has reached the necessary level again. More money should be called into the reserve fund, but the landlord is not prepared to take what we would see as a commonsense action. He threatens forfeiture for not only the lady who wrote to me, but all the tenants in the block unless they pay up. 
 I am vigorously opposed to forfeiture. I thought that we had a great opportunity under this Labour Government to do justice to all our citizens. Although my party has supported abandonment of forfeiture for many years, the issue has received support across the parties. The Government should take action to ban forfeiture. New clause 12, which I have tabled, would ban it. Thank you for your perseverance, Mr. Hurst.

John Taylor: You will remember, Mr. Hurst, that earlier in our deliberations I said that it was often a disadvantage to be a lawyer. I said that in a sincere manner rather than a jocular one, and I want to explain it in a simple way. Lawyers are trained to find negatives, flaws and technicalities. The advantage of the layman is that he knows whether a technicality matters in real life. That is the juryman's judgment.
 The lawyer sees a hairline fault in something, but the layman asks whether that fault broadly matters. In the context of the remarks made by the hon. Member for Bolton, South-East (Dr. Iddon), do the technicalities matter? What about the human suffering that he described?
 Unusually for me, I want to offer the Committee a layman's observation from my experience. In 22 years of high street practice as a provincial solicitor, I never came across a forfeiture case, with either the freeholder or the leaseholder as my client. I ask the Committee to acknowledge that sense of scale. It will arrive at decisions on the clause, so I ask it to consider how wide the grievance is and how many people are affected by it. I will not answer my own questions; I merely place my humble experience in aid of the Committee. 
 I shall deal with the clause, which I know is what you want me to do, Mr. Hurst. Subsection (2) breaks down into three paragraphs. Paragraphs (b) and (c) are linked by the word ''or'', but no ''and'' or ''or'' links paragraphs (a) and (b). Do paragraphs (a) and (b) or paragraph (c) have to be fulfilled, or is it only one of paragraphs (a), (b) or (c)? I do not know whether we need just one of those three options to be fulfilled or whether we need two of them. It would be helpful to know whether paragraph (a) should be linked to paragraph (b) by an ''and'' or an ''or''. 
 The explanatory notes do not help me. The (a), (b) and (c) options are set out on page 54 without any ''ands'' or ''ors'' at all. At least the Bill is superior in that there is an ''or'' between paragraphs (b) and (c). Looking at paragraph 278 for further guidance on (a), (b) and (c), one finds that it refers to ''i or iii above''. The author has lost sight of whether he is using small letters or roman numerals. That is an unhelpful state of affairs. I am a simple Back-Bench Opposition Member, but I seem to have found a weakness and I should be glad if someone would explain it to me.

Shona McIsaac: I am in favour of the abolition of forfeiture. The problems associated with it have been well demonstrated by my hon. Friend the Member for Bolton, South-East, and, on Second Reading, by my hon. Friends the Members for Brighton, Pavilion (Mr. Lepper) and for Brent, North.
 Section 146 notices can allow the seizure and sale of a person's home to pay a debt. That right can be abused by the unscrupulous, but we have heard that good landlords do not need to resort to it—there are many other ways in which moneys owing can be retrieved. People's homes are not often seized, as my hon. Friend the Minister mentioned, but the fact that the law allows someone's home to be seized is, surely, against natural justice in an age when there are alternative means of obtaining money that is due.

Julian Lewis: One reason why homes are not seized is that the threat alone is often enough to cow the tenant into compliance. I know of a case in which someone stood out against the threat of forfeiture and the landlord backed off. In the meantime, however, other tenants in the same building had caved in, probably unnecessarily, but they dared not take the risk of resistance.

Shona McIsaac: I thank the hon. Gentleman for that intervention. I was coming to the threat of seizure, as it is pertinent to this morning's discussion. While cases of seizure are few, the threat of it can be used extensively and it can be used by the unscrupulous as a way of getting a great deal of money.
 In some cases, after the lease of a house has been transferred, the new freeholder writes to the tenant to say that the rent is now X, they have breached their covenants because they have done X, Y or Z, or they have not paid the ground rent. They then say, ''You could risk losing your home if you do not pay this.'' That is bullying. It bullies people into paying large amounts of money—because of the risk of losing their homes, they are so scared that they simply cough up. 
 As my hon. Friend the Member for Bolton, South-East said, leases can be drafted to include the words, ''by way of further rent''. That gives the freeholder the right to issue legal proceedings for forfeiture without a dispute over the service charge being resolved, either in a court or before a leasehold valuation tribunal. That is pertinent to the clause because such freeholders threaten action before a breach has been determined. That is akin to criminal harassment for money. 
 According to the law—the Leasehold Advisory Service has confirmed this—if the ground rent is a day late, that can constitute a breach. Even if the leaseholder then, a day late, decides to pay the £2 or £4, it can be refused and proceedings started.

Gareth Thomas: Does not the case that my hon. Friend cites illustrate the need for a test of proportionality or reasonableness to be introduced into the clause, even if the Government are not prepared to go so far as withdrawing the remedy of forfeiture which one can, perhaps, accept is a remedy that should be available to a landlord in the last resort?

Shona McIsaac: I totally agree with my hon. Friend. We must introduce proportionality into this. That is why many of us feel so strongly about forfeiture and the threats that are used before any determination of breach has been reached in either the courts or the leasehold valuation tribunal.
 My hon. Friend the Member for Bolton, South-East mentioned a letter from the Council of Mortgage Lenders, which represents more than 98 per cent. of the residential lending market. It states: 
 ''On many occasions, lenders have unwillingly had to become involved in disputes between leaseholders and their landlords, invariably because the landlord has threatened forfeiture action against the threat. This usually arises where the two parties cannot resolve the position and forfeiture is used as a severe method of recourse that can ultimately lead to the leaseholder losing their home and the lender losing its security.'' 
So, it is not just the poor homeowners being threatened—financial institutions, such as building societies and banks have their security threatened too. That is why they so strongly support reform or abolition of forfeiture. 
 I think that I have demonstrated my strength of feeling on the matter. The Government do not, at this stage, want to abolish leasehold as a form of housing tenure—many of us have campaigned for abolition for 
 some time—and they do not want to abolish marriage value either. Perhaps they can offer an olive branch and abolish forfeiture.

William Cash: So far, no mention has been made of council houses. In my constituency, people have been evicted in some pretty horrendous circumstances. I want to be sure whether the considerations that are being applied to the private landlord will automatically—in the minds of those who deal with these matters, whether or not the term ''forfeiture'' is used—be expected to apply to local authorities in cases of non-payment of rent and breaches of the rules prescribed by that authority.
 I am not trying to make a provocative point, but I want to enlarge the debate. We must bear in mind that certain rules and regulations, whether they are called covenants or rules, apply to people living in properties. I just want to know what the Government's reaction would be to the suggestion that where there is a breach of such rules, there would be no way of using some form of contractual enforcement analogous to forfeiture. 
 I am trying to enlarge the debate, because the matter involves some important considerations. The Government will probably find that there is more sympathy among Conservative Members who have not yet spoken for the proposal than they might imagine. The issue will be important and it will not be resolved by generalities. I should be grateful if the hon. Member for Cleethorpes (Shona McIsaac) would respond to my point, but perhaps she does not want to at the moment.

Shona McIsaac: The cases of council house tenants and owner-occupiers of leasehold properties are very different. It is always a tragedy when somebody loses their home, but local authorities or housing associations can seek to recover rent in cases of non-payment. If a council tenant falls into arrears with the rent or service charges or if a person has purchased a freehold and is struggling with the mortgage payments, most building societies and banks or local authorities do not come back two days later and threaten such people with the loss of their home. They usually go to extraordinary lengths to come to some sort of accommodation with them.
 When people are in rent arrears on council properties, councils do not evict after day one. The local authority owns the property. I will discuss the different standards applied to council house tenants and leasehold tenants in relation to marriage value and purchase price. Draconian threats before there has been any determination of breach must be avoided. With council house tenants and those with mortgages on freehold properties, one has to determine that there has been a breach before any action can be taken.

William Cash: Has the hon. Lady examined clause 159, which says that someone with a long lease is not liable to pay ground rent unless the landlord has issued a
 notice in accordance with the requirements of that clause? I am engaged in a process of inquiry. The hon. Lady mentioned ground rent before. There are restrictions in the Bill and we all want it to work.
 Clauses 160, 161 and 62 deal with forfeiture on failure to pay service charges and already contain increased safeguards for tenants and the leaseholders. I refer back to your wise remarks, Mr. Hurst, about some of the examples that have been given, which raise some serious questions. Make no doubt about it, I have great sympathy with the hon. Lady's arguments. I simply want to return to whether it is a black and white issue.

Shona McIsaac: I not believe that any of the issues are black and white. As legislators, we must ensure that where abuses occur, we do something to prevent them. I will admit that there has been some tightening up in the other clauses that deal with the matter. However, that tightening up does not address the issue of threat, which is pertinent here. Seizure is rare, but the threats are frequent, as I said earlier and as the Leasehold Advisory Service confirmed to me. A ground rent is increased, a notice is issued, but if the payment of that ground rent is a day late, the freeholder has a right to refuse to accept payment and embark on forfeiture proceedings. That is most pertinent to the debate. If the hon. Gentleman is looking for some other supporters for the abolition of forfeiture—

Alan Hurst: Order. The abolition of forfeiture will be dealt with in the debate on new clause 12.

Shona McIsaac: The Association of Tenancy Relations Officers, which is a national association of local government officers—the hon. Member for Stone (Mr. Cash) mentioned local authorities earlier—supports the abolition of forfeiture. It says that forfeiture is rare but the threat of it is frequent. We must stop people being harassed with the threat of losing their homes.

Andrew Selous: Clause 160 is not adequate. It does not go far enough. There are two main reasons why I find it inadequate. We are deeply committed to considerations of fairness, justice and social justice. It cannot be right that someone can lose their home and a large sum of money purely because they owe a relatively minor amount.
 I have in front of me a letter containing a section 146 threat addressed to Mr. L. R. Philip of Flat 2, Shanklin court, Hove, East Sussex, who owed only £1,200, but was told that unless the sum was received within seven days, legal proceedings would commence. The final paragraph states: 
 ''You should be aware that such action could result in the forfeiture of your lease and the loss of your home. Please ensure that this matter is given your immediate attention.'' 
I do not accept the argument that, because forfeiture is used only rarely, it is not a problem. If it is used only rarely, I wonder why it is necessary to have it on the statute book at all, given that it means that people must face such worrying and unfair threats.
 Forfeiture is akin to state-sanctioned theft. I have no problem with someone being required to pay a debt that they owe under an agreement into which they have freely entered. However, I have enormous problems with the fact that the law allows landlords to take vastly greater sums than are owed and turn people out of their homes. For those reasons, I find clause 160 inadequate. It does not go far enough and I look forward to our debate on new clause 12.

Gareth Thomas: I congratulate my hon. Friends on the cogent manner in which they have presented their arguments on the clause. I share many of the sentiments expressed, although I would perhaps not go as far as others, because I accept that as a long stop it is necessary to preserve the landlord's right to forfeit in exceptional circumstances. I hope that the Minister will be able to respond constructively to this interesting debate.
 If the Government's avowed intention and the Bill's purpose is to deal with the mischief caused by the imbalance of power between the landlord and the leaseholder, why did the Government not import a requirement for proportionality or reasonableness into clause 160? Had they done so, landlords who sought to use the draconian remedy of forfeiture would have to satisfy the court or tribunal that they had met not only the requirements in subsection (2), but the requirement that the grounds for forfeiture were reasonable and proportionate in all the circumstances. I am puzzled that the Government have not introduced that element into the clause. 
 I am even more puzzled because the Unfair Terms in Consumer Contracts Regulations 1999 apply to tenancy agreements and leases. I refer the Minister to the January edition of Legal Action, the monthly journal of the Legal Action Group. An article by Dermot McKibbin tells us that the regulations apply to leases and, importantly, that the Office of Fair Trading has recently published guidance on the application of the regulations, which require the importation of an element of reasonableness and proportionality before a landlord can take advantage of a forfeiture clause. 
 The article refers to forfeiture and rent increase clauses, saying: 
 ''Private tenants have long been confused by forfeiture clauses in their agreements whereby their landlord appears to be entitled to evict them summarily from the property without any reference to the requirements of the Protection from Eviction Act 1977. The guidance''— 
the OFT guidance— 
''recognises that a landlord may reserve the right to forfeit in the tenancy agreement. However, terms that appear to reserve the right of re-entry for minor breaches are likely to be unfair. Forfeiture clauses need to make it clear that it is unlawful for a landlord to evict a tenant and re-enter the premises without a court order.'' 
The article suggests that the breach must be sufficiently serious to match the aim of forfeiture, which is to take away someone's home. It is a reasonable proposition that that should happen only in exceptional circumstances, where a very serious breach is perhaps the culmination of many factors over time.
 Given the view that the Office of Fair Trading takes of the regulations, which the Government introduced, why can it not be made explicit in clause 160, in particular, that the breach that forms the basis of the forfeiture proceedings must be serious and that a court must consider forfeiture reasonable in all the circumstances for it to take effect?

Brian Iddon: Obviously, my hon. Friend supports forfeiture in extreme circumstances, but does he agree with my suggestion that leaseholders should be compensated if forfeiture stays on the statute book and is used in exceptional circumstances?

Gareth Thomas: I understand the strength of that argument, but it might be more appropriate to ask the Minister.
 To conclude on what I hope is a valid point, the parliamentary draftsmen could tackle the issue before Report stage. There is surely a lacuna in clause 160.

Adrian Sanders: I rise to support the hon. Member for Bolton, South-East. Two groups want to retain forfeiture: one is represented by the Government, and the Minister will explain why, and the other is the British Property Federation. It is interesting to consider the BPF's case for retaining forfeiture, which states:
''Forfeiture remains an important management tool for leasehold property'' 
and that 
''it is often the only effective sanction that a manager has over a recalcitrant or unco-operative leaseholder.'' 
The BPF wants it to be preserved 
''until replaced with a mechanism which is more appropriate to modern-day property management.'' 
Even the British Property Federation, therefore, recognises that forfeiture is not an appropriate modern-day property management tool. The BPF also says: 
 ''The Federation has no objection to the proposals on forfeiture, although we do not believe that they represent as complete or as effective a proposal for the modernisation of the forfeiture process as was proposed in the BPF response to the November 1998 consultation paper. We understand that the Law Commission is currently working on proposals for a revision of the law on forfeiture and the termination of tenancies.'' 
It will be interesting to hear what the Minister can tell us about that. 
 I agree with hon. Members who recognise that the important point is not how often forfeiture occurs, but how often it is used as a threat, and we know from our postbags that it is used continually. My suggested solution—I do not know whether the hon. Member for Bolton, South-East would go along with it—is that we should change the statute to allow the landlord a first charge, rather than a right to seek forfeiture. That is the change that is required. 
Dr. Iddon indicated assent.

Adrian Sanders: I am glad that the hon. Gentleman agrees. The Law Society may well be working on changes to the relevant statute.

Gareth Thomas: The hon. Gentleman makes an important point when he says that the real abuse is not so much that forfeiture occurs in many instances—indeed, it appears not to—but that landlords use the threat oppressively. Does the hon. Gentleman agree that we could make an important improvement to the Bill by introducing a mechanism to penalise landlords who use the threat of forfeiture recklessly, wantonly or oppressively without due consideration to reasonableness?

Adrian Sanders: The problem is how we determine reasonableness. Current law still defends and supports a practice that, to the layperson, seems patently and blatantly unreasonable, but which still occurs.
 The greatest differential between the monetary loss from forfeiture and the amount owed exists in regard to non-residential leases, and forfeiture should not be allowed at all in such cases. I would have expected that to have been achieved under the Bill. For long leases, forfeiture could be abolished straight away without an alternative, because the law provides other ways of recouping non-payment of such moneys. In the longer term, there should be a statutory first charge for all leaseholders, which should apply for new leases as well as for existing leaseholders. The hon. Member for Bolton, South-East can be assured that he has the support of both sides of the Committee.

William Cash: So far—it is not over yet—we have had an interesting debate on an extremely important feature of the landscape in respect of leasehold properties. As I said earlier, the Government have added further restrictions to those in the Housing Act 1996. You made it clear, Mr. Hurst, that we would have the opportunity to consider the principle of abolition in the debate on new clause 12, but the debate has already veered in that direction.
 I have already said that Opposition Members have considerable sympathy with the cases put forward and the arguments being made. I, too, received a copy of the letter from Fiona MacMillan and from the other correspondents mentioned this morning. Doubtless, they put their arguments also to the Government. The Minister is nodding, so they have obviously received copies. However, the number of letters does not represent a tidal wave. 
 I listened with great interest to the arguments on proportionality, reasonableness and procedure. They are important matters and cannot be ignored. I agree that some cases are extremely hard, some are extremely bad and some call out for remedy. I take the view at this juncture that the issuing of threats as a mechanism for triggering an unfair and unreasonable response is wrong.

Shona McIsaac: Does the hon. Gentleman believe also that it is wrong that the leaseholder should have to pay for the issuing of that threat? A letter saying that section 146 proceedings are about to be issued incurs a charge to the leaseholder. The Leasehold Advisory Service estimates that it can cost between £300 and £700 plus value added tax for debts that are often as little as £20

William Cash: I have no doubt that there is a great deal of inequity in the manner in which the business is carried out. That is why, in a responsible manner, I am showing a good deal of sympathy for a significant appraisal of the position.
 We heard the views of the Office of Fair Trading, which was another important contribution to the debate. We heard also that the Law Commission is considering the matter. However, the provisions of the Law Commissions Act 1965 sometimes need a bit of a rocket thrust, because it can take an incredibly long time for questions to percolate through the system. For instance, I remember interminable debates over chancel repairs—it is a mediaeval law, and once upon a time, I studied mediaeval law at Oxford.

Shona McIsaac: In the mediaeval period.

William Cash: Yes.
 I am well aware that forfeiture is a penalty as old as the concept of property; it is an ancient provision. It is there as a bottom line because it has been assumed that, as we have moved from the feudal system, to wider property-owing arrangements and the present day, there is a bottom line somewhere, as there is in every contract. We are considering how best to arrive at a point at which we can be not only fair and sympathetic but just to the unfairly treated leaseholder, where the threats amount to a legalisation of domineering behaviour that could be construed, in other aspects of life, as no more than criminal activity. In certain instances, it is as bad as that. I have a great deal of sympathy with that view. 
 At the risk of referring back to earlier proceedings, when my family founded the Abbey National building society in the mid-nineteenth century, it was largely due to the desire to spread property-owning opportunities to people who would not, otherwise, have been able to purchase houses—these are matters of social justice. There is a great deal to be said in favour of straightening out the problem of forfeiture. I was encouraged by the fact that the British Property Federation accepted that forfeiture is an inequitable right that could provide a landlord with a substantial gain. It also emphasised the necessity for a proper remedy for breaches of covenant. We must bear in mind that, in a nutshell, there are people who will exploit their tenancy—whether it is with a building society, on a council estate owned by a local authority, or it is a new form of tenure that has been created in the past few decades—sometimes at the expense of what is fair and reasonable.

Shona McIsaac: If somebody is exploiting a situation, would it not also be fair and reasonable to take him to, say, a magistrates court, rather than threaten to seize his home?

William Cash: Where and how it is to be done relates, as I said before, to the maxim, ''Justice is to be found in the interstices of procedure''. There are means of achieving our objectives and I am not satisfied that the Bill does enough. That is a starting point.

Adrian Sanders: Does the hon. Gentleman agree that the key word here is ''proportionate''? What we have at present is disproportionate to the offence and we need to find a remedy that is proportionate.

William Cash: Yes, I have considerable sympathy with that view; I used the word ''proportionality'' myself. That is the expression that was used in the papers produced by the Office of Fair Trading. This is an important debate, and it is incumbent on me now to wait until I hear what the Minister has to say. I am sure that she has sensed that we are all—I do not think that there is a single person on the Committee who is not—broadly in sympathy with the arguments that are being advanced. If we can strike a balance and get the social justice element of this right, without completely upsetting the framework in this complicated area, we shall have made substantial progress. Maybe we shall return to it on Report. I must hear what the Minister says before I make my concluding remarks.

Sally Keeble: We have had a helpful and thoughtful debate. I recognise the strength of the views that have been put. This is not the debate on new clause 12, and you have indicated, Mr. Hurst, that you are not happy about our straying into a widespread debate on forfeiture. I shall bear that in mind. I should also point out to the Committee that the clause that we are debating provides a further safeguard for leaseholders. People might fear that it is not enough, but we have not yet reached forfeiture. To strike out an improvement to the current situation would, arguably, leave us in an even worse position. I urge hon. Members to focus on what we are talking about, which is an important further safeguard for leaseholders.
 We accept the widespread concern about forfeiture. The hon. Member for Stone is right in saying that views have been heard by the Government from a number of people. My hon. Friend the Member for Bolton, South-East set out a thoughtful and careful critique. We have also heard some distressing examples of leaseholders who have fallen foul of the system. I would add a slight caveat about the Camden case—it is complicated and we are aware of it. The hon. Member for South-West Bedfordshire (Andrew Selous) set out a routine example of the way in which forfeiture can be used; a number of us have experienced such cases. 
 Forfeiture is a draconian penalty. Many people feel that it is unfair that a leaseholder can lose his home, possibly for the non-payment of a relatively modest debt, while the landlord obtains a windfall profit. The hon. Member for Solihull (Mr. Taylor) raised a number of issues, including the fact that in all his time as a lawyer he had not come across a case of forfeiture. It is true that, because of its draconian nature, the courts are reluctant to grant forfeiture unless the leaseholder has failed to take advantage of opportunities to remedy matters. However, circumstances can arise—for example, if a leaseholder is in hospital for a long period—in which the 
 leaseholder does not get the opportunity to resist a forfeiture claim, and that can have disastrous consequences.

Julian Lewis: In the case of Miss MacMillan, who has written to all of us, what appears to have happened is that the judge simply got the law wrong and did not resist the granting of forfeiture, as would, perhaps, normally be the case. There is no way of going back even though she has, apparently, been advised by better qualified lawyers that the judge made a mistake.

Sally Keeble: I do not want to comment on the intricacies of that case. The hon. Gentleman has given the explanation and that will stand on the record.
 In addition—as a number of Labour Members have mentioned—forfeiture enables landlords to practise a wide variety of abuses. Leaseholders who feel that they are at risk of losing their homes, even if the risk is a relatively remote one, are particularly vulnerable to exploitation. The hon. Member for South-West Bedfordshire demonstrated the scale of the problem for people who receive a bill and are told, ''Deal with this or you will lose your home.'' That can be a greater or lesser threat depending on the knowledge and attitude of the person involved; for those who are vulnerable, it is a substantial threat. My hon. Friend the Member for Cleethorpes has frequently made that point, particularly in relation to some of her elderly constituents.

Bill Wiggin: In the way in which the Minister phrased that, that would also apply to freeholders who did not pay their mortgages. The freeholder in both cases is liable only to the first charges, as was suggested by the hon. Member for Torbay (Mr. Sanders). That is the key difference.

Sally Keeble: I will deal with some of the differences when we discuss the Law Commission. The difference between leasehold and freehold is partly the reason why the Council of Mortgage Lenders and others have taken different attitudes to the power.
 Demands for unreasonable charges are frequently phrased in threatening terms and leaseholders are intimidated into paying up. They do not even have to be especially threatening for people to pay up. I do not want to go into the argument about the abolition or otherwise of forfeiture, as we will return to the subject. The Bill focuses attention on the main abuses associated with forfeiture and considers ways in which to prevent some of them and improve the situation. Abuse goes wider than forfeiture alone. Throughout our proceedings, various scams and practices have been highlighted that have caused problems for leaseholders. 
 The main problem is that landlords have been able to use the threat of forfeiture to exploit leaseholders. Fear of losing their homes means that leaseholders have been reluctant to challenge unreasonable charges or unfounded accusations of breaches of covenants. We see that as the most pressing priority, and the Bill includes several measures intended to prevent such abuses. One of them is in clause 159. It relates to 
 written demands, and a string of debates in Committee have dealt with the nature of notices and advice. We have given assurances on the subject.

Shona McIsaac: The Minister mentioned clause 159. Under that clause, notification has to be given of when ground rent is due, but does she agree that that does not get round the problem whereby the freeholder can say that the leaseholder has breached his covenant, even if the ground rent is only a day late?

Sally Keeble: I will not get into a great discussion of clause 159, because we have dealt with it. When we deal with regulations, we will carefully consider the form of a notice. We intend to include a requirement to spell out leaseholders' rights. The Bill improves those rights considerably.
 That brings me back to clauses 160 and 161. They prevent the commencement of forfeiture proceedings, including the issuing of notices under section 146 of the Law of Property Act 1925 that are often phrased in threatening terms, for breaches of covenant unless a leasehold valuation tribunal or court has determined that a leaseholder is in breach of their lease and has been given a period to rectify the matter. Clause 162 similarly prevents commencement of proceedings for non-payment of service charges or administration charges, unless an LVT or court has determined that the sums claimed are legally payable and reasonable. 
 I was asked about proportionality, which courts would have to take into account. There has been some discussion about the sequence of events, and the fact that someone could be tipped into forfeiture without any chance to put the matter right and that costs might be involved. Under the Bill, it will not be possible any more for people to issue forfeiture notices without giving the leaseholder an opportunity to rectify the breach. Therefore, the cost of issuing a forfeiture notice will not be incurred until after the leaseholder has had an opportunity to put matters right or to challenge the breach. It is not as though the leaseholder will not have a chance to deal with the matter without a by your leave, which is an issue that many hon. Members have raised. That is an important safeguard.

William Cash: Would the Minister concede that there was an intermediary position in such circumstances? The question is not merely whether one party or the other should decide that there has been a breach. There ought to be an intermediary opportunity—a stepping-stone operation—to determine the reasonableness of whether a breach has occurred. If she can satisfy us that there is such an opportunity, that will take us further down the route that we want.

Sally Keeble: I think that I can give that assurance, although it is always hard to work out exactly what is in someone's mind. We have a two-stage procedure in which the freeholder has to go to an LVT or a court, with the intention clearly that he should go to tribunal to establish whether there had been a breach before going to the court for the forfeiture. The initial phase
 would act as a stepping stone, and there is a provision under which it will not be possible to issue forfeiture notices without giving the leaseholder an opportunity to rectify the breach. That is a substantial safeguard of the sort that the hon. Gentleman wants. I will return to the other matters that he raises.

Gareth Thomas: My hon. Friend is making important points. The mechanism that she refers to is an improvement on the law as it stands, as it provides an important sifting process. It is intriguing that, provided that the freeholder or landlord can establish that a breach has occurred simpliciter, he does not have to establish the seriousness or nature of the breach. That does not come into the equation. Is that how she understands the requirements of clause 162?

Sally Keeble: The courts would still have to consider proportionality on the application of forfeiture. The first step would be a determination of whether there had been a breach, so there will be an extra step and safeguard for the leaseholder.
 I shall take the opportunity to deal with the issue that my hon. Friend raised about unfair contract terms regulations. The regulations may be relevant, but they would apply only to leases granted after they came into force. Bearing in mind that we are producing a new form of tenure—commonhold—one might reasonably expect the bulk of leasehold tenures to exist already. The needs of all leaseholders would not be dealt with. The point has repeatedly been made in the Committee that the most vulnerable leaseholders are older people who have had their leases for some time. That point has been taken on board, and that is the position on the regulations. The measures that I have set out will dramatically reduce the scope for unscrupulous landlords to exploit leaseholders' fears. 
 The point has frequently been made that it is difficult for leaseholders, particularly vulnerable leaseholders, to exercise their rights. To ensure that leaseholders are fully aware of their rights, it is our intention to amend the Bill on Report to provide a power to prescribe the form and content of a demand for service or administration charges. That will enable us to require that demands spell out leaseholders' rights should they feel that the charges demanded are unwarranted or unreasonable. We will have to come back to that, but it represents a further tightening up to ensure that we do not provide rights that nobody knows anything about. We must make every effort to ensure that people are able to exercise their rights. 
 However, I accept that there is concern that even those measures do not go far enough. There is a danger that some leaseholders may slip through the net of the safeguards. The only way to ensure that that does not happen would be to get rid of forfeiture completely. We will debate that when we come to consider new clause 12. 
 I wanted to deal with the points raised by the hon. Member for Stone about the Law Commission, which is one of the agencies that are examining the matter. The commission has been wrestling with the problem of forfeiture for many years. It has been suggested that 
 we should include in the Bill a power to make regulations setting out a new regime, allowing us to sort out the details at a later stage. That is not realistic. Among other things, the details of a replacement regime would be controversial—

John Taylor: On a point of order, Mr. Hurst. It is right that the Committee should be unaware of anybody else who may be present in the Room—we are Members, and anybody else is a stranger. However, I have just taken the liberty of sitting in the public seats. The Committee's proceedings are public and open, but it is almost impossible to hear what is going on here from that distance.

Alan Hurst: That is not strictly a point of order, but I think that we all understand the hon. Gentleman. We must endeavour to ensure that everybody can hear what any Member says.

Sally Keeble: As I was about to say, we have already left several measures to secondary legislation, but to do so in this case would be a step too far. The Law Commission's work has reached quite an advanced stage. It has been developing proposals to abolish forfeiture across the board. One of the major objections to forfeiture is that, in those rare cases where a lease is forfeited, the leaseholder is left with nothing. That is the draconian nature of the penalty.

Shona McIsaac: Will the Minister give way?

Sally Keeble: Allow me to finish what I am saying about the Law Commission in response to the point raised by the hon. Member for Stone. To avoid the leaseholder being left with nothing, the Law Commission is considering the scope for providing for the long lease to be assigned to a third party and for its value to be shared out, which would deal with the points that have been raised about a fairer division of the proceeds. That would remove the unfairness of a system in which all the value of the lease passes to the landlord. The commission is also considering the scope for imposing penalties on landlords who act improperly.

Andrew Selous: On a point of order, Mr. Hurst. I am sorry to interrupt the Minister, but it is clear that people in the Public Gallery still cannot hear. Will you allow them to come up to the green rope, Mr. Hurst?

Alan Hurst: Order. That is a matter for hon. Members. We should be mindful of our predecessors, who did not have microphones and were able to project their voices. The microphones are being adjusted, and that may resolve any problems of hearing.

John Taylor: Further to that point of order, Mr. Hurst. My hon. Friend the Member for South-West Bedfordshire (Andrew Selous) sought your guidance on whether members of the public could come up as far as the green rope. It occurs to me that the rope is there for a proper purpose. It is a sort of cordon between the Committee and such audience as it may have. I will keep talking as you seek inspiration, which comes in many different, sometimes miraculous ways. The
 substance of my hesitating and shambolic point of order is to inquire of you, Mr. Hurst, whether the public can come forward as far as the rope. I think that they should be allowed to.

Alan Hurst: If that is the view of members of the Committee, and I sense that it is, strangers may approach the rope, but may not come beyond it.

Sally Keeble: Hon. Members feel torn between the convention that we are not supposed to turn our back on the Chair, as we are supposed to be addressing it, and the requirement to be heard by the public, who happen to be at the other end of a very large room. If you do not mind, Mr. Hurst, I will project my voice away from you and turn my back on you from time to time. I hope that that will also help the hon. Member for Solihull, who I suspect cannot hear me very well either.

John Taylor: I can hear the hon. Lady very well.

Sally Keeble: Good.
 The hon. Member for Stone raised the difference between the sanction for leaseholders and that for council tenants. He also asked whether the Law Commission was considering that issue. The issue is the sanctions for non-payment of rent and other breaches of the terms of a lease. That is a vexed question, because there is a difference between a long lease and a short lease. There is also a difference, and this is the rub in this area of leasehold, between a lease with a capital value and one without such a value. Those differences give rise to some of the real problems with leasehold tenure. We are seeking to tackle those problems through reform and appropriate sanctions. 
 You would probably rule me out of order, Mr. Hurst, if I started to talk about the tactics used by local authorities to deal with debt collection, and I would be reluctant to do so, save to say that where authorities have had a problem with debt collection, they have also used robust tactics. 
 There is a real difference in the nature of the various leases that we are talking about. I understand that although, from the legal perspective, it is satisfactory to describe both long and short-term leaseholders as tenants, that goes against the grain for people with long leaseholds, who regard themselves as home owners, despite the fact that they do not own the freehold of their property. Those differences have determined the nature of the debate and that is why we have had such robust discussions in the Committee. 
 I appreciate that the Law Commission has been working on the project for a long time, and that there are concerns about how much longer it might take it to come up with some proposed legislation. However, work on the issue is now well advanced, and the commission plans to introduce revised proposals for consultation in late spring or early summer, with a view to the preparation of a draft Bill during the 2002-03 Session. I hope that that will produce a fairer and more workable solution in the longer term, while preserving the property rights of freeholders and leaseholders.

Andrew Selous: Will the Minister comment on an anomaly? The law regards leaseholders as tenants because of their terms of tenure, but when it comes to assessing their assets for residential care purposes, the law regards them as possessing wealth through their property. We are, therefore, on difficult ground because the law and the regulations are applied in two different ways. On the one hand, people are tenants, but on the other hand, they are not, because they have an asset the value of which will be taken into account when state provision is decided.

Sally Keeble: I will not go too far down that road, although, as I said, there is an important difference between short-term and long-term leases, in that long-term leases have a capital value, and people pay a capital value for them. To deal with the point raised by my hon. Friend the Member for Cleethorpes, one difficulty with the form of tenure that we are discussing is that the asset's value declines. People with a short-term lease have difficulties because the capital value of their lease has declined over the years, which, in some ways, appears to be a contradiction in terms.
 A further complication, which explains why the Council of Mortgage Lenders and others take the attitude that they do, is that their security rests in the capital value of the lease. Even a short-term tenancy will have value, but there is a difference between the leases.

Bill Wiggin: If the mortgage companies have a claim over the lease, as the Minister suggests, we need not await the Law Commission's draft legislation. The law surely already allows companies to repossess a property for failure to pay. We do not need forfeiture in the form that it takes in the Bill; we must simply adopt the present structure, which gives companies the relevant rights.

Sally Keeble: Again, I do not want to stray too far into a discussion of that issue. The nature of the security and the interest are different. The freeholder owns the freehold of the property, which is different from being a mortgage holder. I do not want to get too far into the difficulties because I would probably box in the Law Commission, the Council of Mortgage Lenders and the House. The issue is complex, and we need to put in place workable provisions—not ones that merely appear to work to the outside world. That explains why it is important to wait for the Law Commission to work everything through and make proposals, and we have, indeed, been given important assurances on time.
 Having said all that, I appreciate the strength of feeling on the issue. I know that hon. Members feel that the Bill contains important measures to tighten up provisions for leaseholders, and clause 160 is a step forward, not a step backwards for leaseholders' rights. Equally, however, I understand why hon. Members want further safeguards to deliver better protection for leaseholders now and do not want to wait to hear what the Law Commission has to say. I assure hon. Members that I shall reflect carefully on their arguments, with a view to considering further amendments on Report.

Shona McIsaac: Will my hon. Friend give way?

Sally Keeble: No, I am just finishing. We shall consider amendments to meet hon. Members' concerns.

John Taylor: Will the hon. Lady deal with my question?

Sally Keeble: Yes, I am sorry—I should have done so ages ago. The wording should be ''or'', ''or''. One of the three conditions must be met.

John Taylor: In that case, I must beg the Minister to give way.

Alan Hurst: Order. Is the Minister giving way?

Sally Keeble: No. I was on my last sentence. I apologise for not having clarified the point earlier.
 We shall consider amendments to provide further safeguards. We urge hon. Members to support the measure, which is a step forward, not backwards for leaseholders.

John Taylor: I cannot leave the issue at that. Unless the Minister makes the position very clear, I shall seek to adjourn the Committee until we get an answer. The whole point about clause 160 is that paragraph (1) is the operative provision. Paragraph (2) explains when paragraph (1) is satisfied. There are three paragraphs, (a), (b) and (c). Paragraphs (b) and (c) are linked by the word ''or'', but (a) and (b) are linked neither by the word ''and'' nor by the word ''or''. The Minister tentatively said that there should be an ''or'', and I want her to make that absolutely clear. Can I have an assurance that an amendment to that effect will be tabled on Report?

Sally Keeble: I am sorry that I did not intervene earlier, as I intended. I give an absolute assurance that there should be an ''or'' after paragraphs (a) and (b) and that only one of the three conditions must be satisfied.

John Taylor: No, not after (a) and (b), but between (a) and (b).

Sally Keeble: Sorry, the ''or'' should come after (a) and before (b). The clause should read, ''(a) it has finally determined on an application under subsection (4) that the breach has occurred, or (b) the tenant has admitted the breach, or''.

John Taylor: I am very much obliged.

William Cash: We are reaching the end of this important debate, and I want to make one or two points that have not been mentioned.
 During the consultation process, the British Property Federation had several additional thoughts about how to resolve matters. It accepted that forfeiture was an inequitable right, but said that landlords should have an effective remedy for breaches of covenant. It went further, however, as regards the level of arrears. None of my comments are intended to prejudice our consideration of these issues, as we move towards Report stage. No one doubts what issues are 
 at stake—the importance of proportionality, achieving a balance with social justice and so forth. We must, however, be practical. The BPF said that it would support the introduction of a minimum level of arrears and/or a minimum time for which arrears must be outstanding before proceedings could be taken. That is another thought to throw into the pot. 
 The BPF suggested that a series of procedures could be developed to enable property managers to take quick and effective action to enforce covenants in a lease. 
 It has not yet been said what would happen if premises were being used for criminal activity. Leases have covenants against criminal activity or causing injury or nuisance, and environmental questions could arise. A whole stack of serious questions could arise. For instance, a person could be engaged in activities contrary to the provisions of the lease that were blatantly criminal, such as drug use on a massive scale—or on any scale—or child abuse. That must all be taken into account.

Shona McIsaac: We could send them to prison.

William Cash: The hon. Lady says that we could sent them to prison, but that would not prevent someone else from moving in and continuing the practice. We must consider such questions, because the bottom line of forfeiture is whether, in extremis, people can be removed because they have broken their promises. A covenant is a promise that a person will pay a certain sum in a certain manner in certain circumstances. The criminal law would certainly apply against freeholders in possession—I agree with that—and leaseholders.
 It is rather encouraging that we should have discussed those questions transparently and objectively, but we must take account of the fact that going further down that line and tightening up the arrangements will take us into the sort of territory that I have mentioned.

Adrian Sanders: Two issues are becoming confused. One is eviction, and the other is the confiscation of assets. We should be concerned about the first, not the second. That is what we want to see removed.

William Cash: I do not dispute that, but I am making the general point that the question of eviction can depend on the behaviour of the person on the premises. Let us not go further into that question. The confiscation of assets, taking away the drugs, the money and so on is, of course, one aspect of the problem; but we are also dealing with the question of whether, in relation to blocks of flats, leasehold houses or other premises, others in the neighbourhood are being severely prejudiced by the fact that some people in the premises are behaving in a manner that is totally out of court. I do not want to develop the argument further. I put that point in merely as a back stop.
 The Association of Residential Managing Agents and the Royal Institution of Chartered Surveyors suggest a forced sale—I am sure that the Minister is familiar with the idea—that would allow the landlord 
 to recover the full entitlement for breach of contractual obligations and the leaseholder to remain in possession of the balance of the equity.

Shona McIsaac: Has the hon. Gentleman looked at the DETR guidance issued in January 2000 on the Government's proposal for this part of the Bill? It states:
 ''We accept the need for effective sanctions against defaulters. But we do not believe it is right that a landlord can gain a windfall profit by obtaining absolute possession at the expense of the leaseholder. Instead, we propose that where the landlord obtains possession, the leaseholder should be compensated for the loss of his interest after deducting monies owed to the landlord.'' 
Has the hon. Gentleman seen such a provision in the Bill?

William Cash: The hon. Lady has had ample opportunity to direct that point where it could be most effectively directed, which is to the Minister. That is the purpose of the exercise. However, I am glad that she has used me vicariously to make the point. If it bounces off me to the Minister, I am sure that she will take it into account.
 We do not need to enlarge on the subject. We can debate it further on new clause 12. I have heard a lot of very interesting propositions. Opposition Members are giving sympathetic consideration to shifting the argument to a point that will be within the realms of proportionality, but also will ensure that proper social justice goes with the arrangements. I believe that that is the sense of the whole Committee. 
 Question put and agreed to. 
 Clause 160 ordered to stand part of the Bill. 
 Clauses 161 to 165 ordered to stand part of the Bill.

Schedule 12 - Leasehold valuation tribunals: procedure

William Cash: I beg to move, amendment No. 114, in page 124, line 31, after 'tribunal', insert
'and to any such other party as the leasehold valuation tribunal may direct'.

Alan Hurst: With this we may discuss the following amendments: No. 115, in page 124, line 32, after 'information', insert ', or to supply any documents,'.
 No. 116, in page 124, line 32, after 'may', insert 
', on the application of a party or of its own initiative,'.
 No. 117, in page 124, line 33, after 'tribunal', insert 
'and to the other party or parties as the case may be'.
 No. 100, in page 124, line 36, leave out subparagraphs (3) and (4).

William Cash: This group of amendments deals with the mechanics and performance of leasehold valuation tribunals. At present, an appeal to the Lands Tribunal is by way of a complete re-hearing. The parties are forced to call all their evidence again and little or no regard is paid either to the evidence given to the tribunal or to the reasons given for the decision. As a result, an appeal gives a dissatisfied party a second bite
 of the cherry. It can be used by a wealthier party as an instrument of oppression, notwithstanding the proposed requirement for leave to appeal. Mandatory appeal by way of a re-hearing is anomalous in the area of civil litigation, particularly in the light of the civil procedure rules introduced by Lord Woolf. Moreover, it suggests a lack of faith in the LVT's decision making, which hardly accords with the extension of its powers, both in recent years and in the Bill. My proposals would bring appeals to the Lands Tribunal into line with other civil appeals.
 At present, LVTs have no power to direct disclosure of documents or information relevant to an application. That is anomalous in the context of civil litigation and might lead to parties withholding information or documents harmful to their case without sanction. I suggest that the LVTs need more teeth and that their new powers should be exercised more for the benefit, and on the application, of parties to proceedings before them. The explanatory notes to the Bill say that it provides a power to make regulations enabling LVTs to exclude the whole or parts of cases of parties who fail to comply with directions. That needs to be remedied. 
 At present, LVTs cannot make directions as to the preparation, form or conduct of an application and have no sanction except for adjourning with no power to award costs if a party does not heed its exhortations to produce reports and documents in good time before a hearing. As a result, all too often the party turns up on the day of a hearing with an expert's report that has not been disclosed before, leaving the other party with a dilemma—whether to go ahead without having a proper opportunity to verify the contents of the report and to prepare a cross-examination on it, or to ask for an adjournment, thereby losing the costs of the day. That practice has gained some notoriety among users of the LVT. 
 The Government have been considering that problem and they may suggest that they are already making arrangements under the Bill to deal with such questions. However, I want to put them on the record. The practice that I referred to can only cease if the LVT is given the teeth that it requires. I want to be sure that the Government cover the whole ground. That is why I am addressing them in these terms. 
 Paragraph 8 of schedule 12 provides for procedure regulations to include provision for the determination of applications or transferred proceedings without an oral hearing by a single panel member. It is not clear what sort of applications it would be appropriate determine in that way. In such circumstances, we should bear in mind the human rights convention and the right to a fair and public trial. Paragraph 10 of schedule 12 would, for the first time, provide the LVT with powers to award costs, but only where an application is dismissed on the grounds of frivolous, vexatious or abusive process or where the party in question has acted frivolously, vexatiously, abusively, 
 disruptively or otherwise unreasonably in connection with the proceedings, and then the amount payable cannot exceed £500. 
 Bearing in mind the perception of the LVT as an informal, cheap tribunal, it would be wrong to empower LVTs to award costs following the event in all cases. However, they must have greater powers to impose sanctions in certain cases. Those include: where a party has failed to comply with directions, thereby occasioning an adjournment; where, a party has acted unreasonably in proceeding in the first place, or in pursuing the case after the other party makes a reasonable offer, although the conduct of the proceedings may not have been unreasonable in procedural terms; or, where a party has been forced to take proceedings because of the unreasonable conduct or stance of the other party. Such conduct might include: specifying a ridiculously high or low price for enfranchisement; utter mismanagement, in the case of a landlord; or, in the case of a tenant, refusing to pay service charges without any justification, thereby potentially throwing the costs of recovery on to his fellow tenants through the service charge. 
 Only when the LVT has the powers envisaged by the amendment will landlords and tenants, perhaps, be deterred from playing the system as both do at present. Furthermore, the costs limit is both arbitrary and too low to operate as a sanction in the case of wealthy parties. The LVT should be empowered to award costs at such a level as it thinks fit up to the full amount incurred by the innocent party, subject only to an obligation to have regard to the paying party 's needs. 
 Finally, under clause 86 of the Bill an RTM would be liable for a landlord's costs before the LVT if the tribunal dismissed its application for a determination that it was entitled to the right to manage premises. As things stand, such a power would be anomalous in the context of the LVT's limited powers as to costs in general. 
 Although the Government have heard some of these arguments before, my object in presenting them now is to weigh them against the actions of the Government to date in the light of what has already been said and to hear the Government's thinking at this stage.

Adrian Sanders: The hon. Member for Stone said that the schedule relates to the procedure of the LVT. Amendment No.100 is intended to remove the criminal sanction included in sub-paragraphs (3) and (4) of paragraph 4. It is inappropriate to introduce a criminal sanction into civil proceedings in this way. Failure to comply with the notice should invoke a sanction, of course. However, it should be civil, not criminal. Civil contempt of court provisions applied in the county court would appear, in our view, to be more appropriate as a model, so it is a simple amendment, with a simple explanation. I look forward to receiving a simple response.

Sally Keeble: The hon. Member for Stone made some points that relate to the amendments Nos. 118 to 120 and some relating to amendments Nos. 123 -126, which we are not considering.

Alan Hurst: Order. We are considering amendments Nos. 115, 116, 117 and 100. We shall shortly come to the group to which the Minister refers.

Sally Keeble: I want to make it clear that I am not evading the hon. Member for Stone. It will be better if I answer his points later, if he is happy with that.
 Amendments Nos. 114 to 117 relate to the power of the LVTs to demand information. I am happy to assure hon. Members that we believe that the power in paragraph 4 to schedule 12 already enables LVTs to do all the things that amendments Nos. 114 to 117 seek to allow them to do. Documents are but one form of information that an LVT might require. It is the normal practice of LVTs to share any information that they receive with all the parties involved as a matter of natural justice. The LVT can exercise that power under its own initiative, although it may, equally well, decide to do so in response to a request made by one of the parties. 
 The hon. Gentleman spoke about the procedures for appeals to the Lands Tribunal from the LVT. Whether an appeal should involve a full hearing or be limited to a review of the original decision is a complex matter and one that arises in many different contexts. It is an issue that deserves careful consideration. As the Committee may know, the Government are examining reform of the tribunal system as a whole, in the light of the report by Sir Andrew Leggatt. We have completed a comprehensive consultation exercise on the recommendations made in the report, including the issue of onward appeals, and intend to announce our conclusions in the summer of 2002. 
 I am sure that hon. Members will agree that an important and complex issue such as this is best considered as part of, and in the context of, the 
 Government's wider-ranging work. That will enable us to ensure that a sensible and consistent approach is taken across the tribunal system. I hope that that deals with the hon. Gentleman's point. 
 Amendment No. 100 deletes the provisions of the Bill that make it an offence to fail—without reasonable excuse—to provide such information as is requested by the LVT in accordance with paragraph 4. These provisions are similar to those contained in paragraph 7 of part 1 of schedule 22 to the Housing Act 1980, which would be deleted by this Bill. 
 As hon. Members may be aware, LVTs sometimes find it difficult to deal with parties who refuse to comply with directions or who act abusively at a hearing. Therefore—there is some conflict in the arguments about whether an LVT should have more or fewer powers—we aim to give LVTs greater powers to deal with those who fail to co-operate in proceedings. The amendment would take those powers away. Bearing in mind that I shall deal with the other matters raised by the hon. Member for Stone at the appropriate point, I would ask him to withdraw the amendment.

William Cash: Having heard what the Minister has said, at any rate for the time being, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order. 
 Adjourned till this day at half-past Two o'clock.